Scrap dealers rush to the border as Council suspends issuing and renewal of licences

The Scrap Metal Council, which is under the State Department of Industry, has suspended the issuing and renewal of export licenses with immediate effect.

This came after it emerged that the Kenya Revenue Authority (KRA) requirement for companies to operate with eTims accounts had led to an increase in scrap smuggling across the border.

Scrap Metal Council Chairman Francis Mugo announced the decision after what he said was an increase in vandalism of critical government infrastructure, such as power lines, costing the country millions.

“The Council has decided to suspend the renewal and issuance of export licenses with immediate effect until further notice,” Mugo said in a statement to newsrooms.

“The country has received so many applications from people wanting to export scrap metal from Kenya, even though the country does not mine copper,” he added.

Mugo said the introduction of the eTims system had resulted in most scrap dealers selling their products across borders, with Tanzania emerging as one of the key markets.

“The council has not and will not allow unscrupulous businessmen to ruin the working atmosphere of others. Anyone smuggling scrap metal should be warned: their days are numbered,” Mugo said.

He stressed that the Namanga, Taveta Lunga-Lunga and Busia borders have become popular smuggling routes for traders of illegal products.

However, the chairman praised the KRA for its ongoing fight against smugglers and pointed out that this year alone, 50 trailers carrying scrap metal smuggling had already been intercepted by the tax authorities.

Referring to an incident on Friday in which a trailer loaded with used batteries bound for Tanzania was intercepted, Mugo reiterated the council’s decision to suspend the licensing and warned that the law would eventually catch up with unscrupulous traders.

The Chairman also urged the already licensed scrap dealers to act within the framework of the law while exporting their goods.

“The association is currently working with various stakeholders to ensure that this vice is completely eradicated. These consultations are aimed at sensitizing members on the need to act within the law,” Mugo noted.

He further noted that the Council is relying on the amendment and subsequent full implementation of the Scrap Metal Act of 2015 to help the country combat the smuggling scourge and also to employ more officials to combat this illegality.

“One of the challenges facing the Council is the limitation of staff capacity. The Council receives secretariat services from the Ministry of Foreign Affairs for Industry and therefore we are not able to effectively inspect scrap dealers as there are no official inspectors due to staff shortages in the Council,” he noted.

In particular, all taxpayers who carry on business must be registered with eTIMS. This includes taxpayers who are not registered for VAT but are registered for sales tax, monthly rental income, partnerships, corporate tax and personal income tax (including non-residents with a permanent establishment in Kenya).

The aim of eTIMS is to reduce compliance costs for VAT registered businesses. However, businesses are skeptical about adopting eTims, fearing that it is a ploy by the government to get them to pay more tax.